Report on Strategic Management: Tesco's Global Context in Netherlands

This report provides a comprehensive analysis of Tesco's strategic management approach in a global context, specifically focusing on its planned expansion into the Netherlands. It includes an internal and external analysis using SWOT and PESTEL frameworks to identify opportunities and threats. The...Read More

Strategic Management
in Global Context

Executive Summary
This report covers the strategic management which the company adopts in order to gain market
share in a new market. The main purpose of this report is to make the identification of internal
and external analysis which help in determining the threats and opportunities for the company. It
will also cover the ways by which company can make its entry in new country and what
methodology will the company will be using including that of standardised or adapted.
Furthermore, it will also cover the Porter' generic strategies which helps in gaining competitive
advantage. This report will cover the business plan which will tell that how the company will
measure its success in the near future.

Table of Contents
Executive Summary.........................................................................................................................2
INTRODUCTION...........................................................................................................................4
MAIN BODY...................................................................................................................................4
Internal and external analysis of a company with the possible solutions...............................4
Three modes of market entry with the recommendation........................................................6
By what extent company has to include the nature of standardisation or adoption for the
chosen country........................................................................................................................8
Porter's generic model............................................................................................................9
Business plan for Tesco........................................................................................................10
CONCLUSION..............................................................................................................................12
REFERENCES..............................................................................................................................13
Books and Journals...............................................................................................................13

INTRODUCTION
Strategic management is the process which is used by the managers to make the identification,
analysis and management of their strategies so that they can achieve the objectives of a business.
The company will be called as a profitable organisations when they are earning the revenue
which is more than that of average profits of other companies of the same industry. Strategic
management can also be called as the decisions which is undertaken by the manager of a
company in order to achieve and gain higher firm performance(Victoria, 2019). But for the
proper strategies it is also important that the manager is having complete knowledge on how to
make proper strategies for a company which will work out the best. Tesco is a multinational
grocery and general merchandise retailer which is of British and is situated in Welwyn Garden
City, England. Tesco was established in the year 1919 and having its operations in many
countries and now they want to make the expansion in Netherlands. This report will cover
internal and external analysis, modes of market entry, whether the business has to be
standardised or adapted, application of Porter's generic strategy and a business plan.
MAIN BODY
Internal and external analysis of a company with the possible solutions
The internal and external analysis of Tesco have been explained below-
Internal analysis-
SWOT-
 Strengths- Tesco is a biggest multinational company which is doing its operations in
many countries and now the company wants to make the expansion of its business in
Netherlands. The main strong point of company is that they are the biggest stores of
grocery in Britain and for making the expansion in Netherlands they can develop the
same thing with the different products consumed by the people of Netherlands (Durand,
Paugam and Stolowy, 2019). The other strong point is that they are having many
international operations which provides them the idea as to how they have to develop
their business in another country.

 Weakness- Despite of the strong points which the company is having there are some of
the weak points which they have to develop in order to make the company stand in the
market of Netherlands. This is because their business have got failed in the market of
Japan and also in US. So they have to focus on their business strategies which they will
be adopting in Netherlands for establishing their business. The other main weakness
which Tesco is suffering is that of food safety issues which they are not able to meet.
 Opportunities- For the expansion of its business there are many business opportunities
which they can avail in Netherlands only the thing which is left is that of strategies which
they have to adopt in a proper way(Kramer and Kroon, 2020). The first opportunity
which is present with them is that of online selling as consumers are mainly operating
their things online and when the services will be provided to them with such flexibility
then there are more chances of gaining more customers. The other is to make the
expansion in new market which they are doing in Netherlands. Threats- For establishing any new business in different country more than the
opportunities at the time of expanding the business there are threats which can decline the
goodwill of a company. The main is the existence of retail business in the market of
Netherlands which will make it difficult as the consumers will be making purchases from
those companies only. The other is identifying the needs of customers and if the analysis
has been done in a wrong way then the business will have to faced the losses like that of
US.
PESTEL analysis-
 Political factors- Tesco have operated its business in many countries and in every
country there are different rules and regulations which has to be followed by them. It is
also important for the business to follow the rules because of this factor it becomes
difficult to operate the business(Au, 2018). Government of Netherlands have provided
support to many businesses which will be helpful for them at certain point.
 Economic factors- Every economy works in different way and it is important for those
business who are making expansion in different country. It can be in relation with
payment of taxes and the needs of customers. Tesco is making diversification in different
countries but is is wholly dependent on UK market. Their main aim of establishing their
business in Netherlands is to provide and focus on the value based products.

 Social factors- Making expansion of the business is not simple as the owner has to look
on different perspectives including that of needs of customers which is the main segment.
Tesco have to work according to the needs of customers and the trends which is present
in the market because this is the only way by which they can achieve growth.
 Technological factors- It is important for the business to adopt the method of technology
because of the increase use of new machinery which is having the modern version. Tesco
is trying to make a development on such methods which will help in providing the best
products and services to customers(Vora and Kainzbauer, 2020). Also, the other factor is
to keep a check on the market as to which technology are in use and what will be liked by
the customer so that they can include in their stores.
 Environmental factors- When the company wants to expand its business in other
countries then at that time they have to consider the factors of environment which avails
there. Tesco have worked on removing the carbon footprint and for which they are
committed to reduce it by 50% by the year 2020. But in some other aspects they are
facing difficulties to follow more regulations but they have launched many things
including that of Reduce, Reuse and recycle.
 Legal factors- Companies have to work upon different policies of the government of the
countries in which they want to start their business. Tesco in every country in which they
are working on their business are following the legal factors because this will help them
in working according to the rules of government which will not bring them in any
allegations(Carter and Stickney, 2019). The reputation of the company is also built with
the same thing also and if they will not follow then it might be difficult for them to come
to same position.
Recommendations- For better functioning of company activities they have to build different
strategies as this will help them in competing with other existing business. They must make the
analysis on the market needs and by which thing customer will be satisfied in order to achieve
success in the new market.
Three modes of market entry with the recommendation
For every business it is a difficult step to start their business in new country and in new
market because with that they have to conduct many researches. Firstly, they have to make the

identification of market opportunities as whether they are having or not. With this they have to
make the analysis on the capabilities which they have internally as well as externally which
means how they can face the external environment. They have to work on timings also as which
time will be beneficial for them to make the entry in a target market(Gómez‐Solórzano,
Tortoriello and Soda, 2019). For the growth and expansion of the business Tesco can use some
of the market entry modes which have been explained below-
 Direct exporting- It is the method in which good are directly exported to other market
which means the overseas market. This method is considered to be the fastest route by
which business can be expanded. This method is also called as the direct sales in which
the company is just making the exporting of their products. Tesco can also opt for the
importing of products in the market of Netherlands but for that they have to make a
contact with the retailer who will make the supply of products to the customers. The main
advantage of selecting this method is that the overseas representative can be selected
according to the their business objective(Dehghani Firouzabadi and Fathali, 2019). The
disadvantage point is providing products in a offline way can be highly costly for the
company.
 Licensing- Licensing is business agreement in which one company provides the right of
patents and copyright to the other business so that they can make the use of it fully. In
this, if Tesco will be using this method then they have to pay some royalty or fees to the
other company whose name they will be using in order to establish their business. The
licensing is the best method for the business if they want to start their business in other
country because with that the cost of entry for them will become less as compared to the
other mode of market entry. But sometimes it is quite difficult to exercise full control
over the business policies as it is being owned in the name of others.
 Joint ventures- Joint venture is considered to be the best option for making the entry in
new market because with that businesses can make the expansion by making the merging
of their company with another one. For Tesco Netherlands will be new but if they will
make the merging of their business with other local business than at that time they would
be able to share their profits and losses both together. In this method, companies who
want to make the expansion in new market can get the reliable information from the local
company with which they will be making the merging and this will help them in getting

to know more about the country and their culture. The risk of political power will be less
in it because the local business will be having all the knowledge about the market. But
the main difficulty is that at time it might be possible that business have to face some
conflict with the other one.
Recommendations- Tesco must use the option of joint venture for the expansion of their
company in Netherlands. This is because if they will make the merging of company with that
company which is already existing in that market then they will be knowing about the market
and the what culture exist in Netherlands(Remmer and Gilbert, 2019). The other main benefit
which they will be getting is the sharing of technology and assets helping them to attain success
in the market.
By what extent company has to include the nature of standardisation or adoption for the chosen
country
The standardisation approach informs that the culture and environment are similar and in
this there is no modification of products and services to meet the demands of consumers. This is
mainly the way by which company will be selling the same products as they are providing that in
their older markets because some of the owners of business are in that viewpoint in which they
have to provide the products of different place in a new country because they believe that there
are chances of making expansion in the market (Vasile and SIMION, 2019). On the other side,
there are some chances that the products are achieving the success in the market because there
are very less chance of developing the penetration of product in the new market because
customers want things which they like.
Adaption is different from that of standardisation because when companies make entry in new
market then at that time they make the analysis of all the factors which includes internal as well
as external factors. Not just this it also becomes very important to make the analysis of
constraints which can come while making the entry in the new market so that company can
frame policies according to it. Tesco is a multinational company which deals in groceries and
general merchandise products so it becomes very important to them to develop the adaption of
their products according to the requirements of consumers(Sinha and et. al., 2020). This business
will not be able to make any development if they will not provide the good and services which
the consumer aims for. It also includes the groceries, food products, homeware and many more

and these products will be provided on the basis of what is there in the market and according to
the trend. Every company has to adopt some steps if they want to make adoption and
modification according to the needs of consumers and that includes the identification of new
market in which the company wants to make their presence and with that they have to compare it
with the current market in which they will dealing with the consumers(Suhail, 2018). It is
important to make the comparison because with that Tesco will get to know about the strategies
which they have to adopt and with that they will get to know the ways by which they can
proceed with all the activities. Tesco while making the setup of its business in the new market in
which they can either make changes according to the products or they can make some changes or
the modification in accordance with the brand name or the brand positioning. This will be useful
for business and by making some adoption according to the market they can also achieve
success(Urbano and et. al., 2019).
Porter's generic model
In order to have competitive advantage in the market, companies try to differentiate their strategy
so that they can get some unique features and can gain competitors advantage in the market
(Syed, J. and Ozbilgin, M., 2019). The model was first introduced by Michael Porter in the year
1985. There are four strategies which can help the company in gaining competitors advantage in
the market which are given below:
Differentiation focus: In this strategy the company focuses on a particular market niche
and try to provide unique products and services to them so that they can create a strong
customers base in that particular market. In case of Tesco, the company can provide some unique
products in the market of Netherlands which can help the company in attracting potential
customers of that market.
Cost focus: It refers to the strategy of the company through which they can create a
unique low cost or good quality product which can help them in attracting potential customers of
the market. In case of Tesco, the company understands that markets are highly price sensitive
and the company can create a strong loyal customer base on the basis of low cost factor (Au, K.,
Han, S. and Chung, H.M., 2018). By applying this strategy the company will be able to not only
increase the market segment of the company but will also be able to attract a large market
segment of the company.

Cost leadership: It refers to the strategy of the company through which they can focus
on the cost of the product and try to reduce that cost so that the company can get competitors
advantage in the market and also can attract potential customers as the markets are highly price
sensitive. In case of Tesco, the aim of the company is to provide good quality products to its
customers at affordable prices. By enhancing the supply chain of the company they will be able
to reduce further cost of the producer and can also save ordering cost and carrying cost of the
products.
Differentiation: It refers to the strategy through which the company can add some
unique features to its products and services so that they can attract more customers and market
segment and will be able to increase the reach of the brand (Hersperger and et. al., 2019). In case
of Tesco, the company can provide some innovative products to its customers according to the
prevailing trends in the market and can also use effective marketing techniques to provide
information to the customers about the innovative and unique product.
Recommendation
In context to Tesco, it will be beneficial for the company to adopt cost leadership strategy
as it will help the company in attracting large amount of customers and will also make sure that
the company is having a loyal customer base. It can be done by the company by reducing the
cost of the product as in that way the company will be able to have a loyal customer base also
they will be able to have a slightly high profitability.
Business plan for Tesco
Company overview
Tesco Plc. is a British Multinational groceries and merchandise retailers. The company
was incorporated in the year 1919 by Jack Cohen and are having both online and offline presence
(Dzwigol and et. al., 2019). The company is a supermarket chain and is selling large variety of
products and services including groceries, beverages, food products, snacks, etc. The company is
also providing electronic goods and financial services to its customers.
Mission
The mission of the company is “we make what matters better, together”. The
statement states that the company believes that the success of the company is because of
contribution of everyone who is a part of the company and its workings.
Vision

The vision of the company is to be a highly valued brand. They want to provide better
quality products to its customers at lower prices. It is important for the company to make sure
that all the stakeholders are satisfied and happy with the performance of the company.
Objectives
 To expand the business in Netherlands.
 To enhance the online presence of the company
 To provide complete contactless services
Strategies
In order to achieve the objectives, the company must adopt effective innovation strategies
so that the company can engage innovation and creativity in the organisation (Carter, W.R. and
Stickney, L.T., 2019). It is important for the organisation to make sure that they are enhancing
their online presence so that they can reach out to wider audience and can also create awareness
about the company in the new market in which they are entering. It is important for the company
to create a loyal customer base and will also be able to have big market segment which will help
the company in having competitors advantage in the market.
STP
Segmentation
It refers to division of the market into various segments or groups according to factors
such as demographics, Psychographic, geographic, etc. it helps the company in identifying
market in which the company can have potential customers so that they can plan and apply their
strategies according to that market segment only. In case of Tesco, as the company is providing
large variety of products, they are capturing almost every segment specially of the market.
Targeting
It refers to target a particular market segment which can be the potential customers of the
company. It is important for the company to attract or target correct market segment as it will
make sure that the company is able to attract correct market segment (Vargas and et. al., 2018).
In case of Tesco, the company is targeting the young age groups and middle income groups who
are looking for quality products at affordable prices.
Positioning
It refers to the position of the company in the market and in comparison to its
competitors. In case of Tesco, the company in comparison to big four supermarkets is in the best

position. The company is recording a growth of 2.2% each year and is also enjoying competitors
advantage in the market.
CONCLUSION
From the above report it can be concluded that when any company wants to make
expansion in some another country it becomes very important to develop the strategies as it will
help them in achieving the objectives. When the strategies will be implemented by the manager
of a company it will help them in making the identification of opportunities because strategies
are created on the basis of identifying the opportunities which are present in the market. When
the company is entering into new market they have to make the preparation as to what things
they will be doing and with they also have to make the preparation of future which can be done
with the help of making strategies.

REFERENCES
Books and Journals
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renewal: a twenty-six nation analysis of family firms. Cross Cultural & Strategic
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Carter, W.R. and Stickney, L.T., 2019. A capstone for the capstone: An experiential exercise in
strategic management. Journal of Management Education, 43(3), pp.233-261.
Carter, W.R. and Stickney, L.T., 2019. A capstone for the capstone: An experiential exercise in
strategic management. Journal of Management Education. 43(3). pp.233-261.
Dehghani Firouzabadi, S.J. and Fathali, M., 2019. Providing of the Islamic Republic of Iran's
strategies for Turkey's role in the development of North Africa and West Asia (focusing
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Durand, R., Paugam, L. and Stolowy, H., 2019. Do investors actually value sustainability
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Hersperger and et. al., 2019. Understanding strategic spatial planning to effectively guide
development of urban regions. Cities, 94, pp.96-105.
Kramer, A. and Kroon, B., 2020. Family Capital in Family Businesses: Complementarities of
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family businesses, pp.1-21.
Remmer, S. and Gilbert, D.U., 2019. Applying Materiality Assessment in Strategic Management:
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orientations and environmental conditions matter in the new socio-economic
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Vargas and et. al., 2018. Enablers of sustainable supply chain management and its effect on
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Vora, D. and Kainzbauer, A., 2020. Humanistic leadership in Thailand: a mix of indigenous and
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